Friday, 9 January 2009

2009 - Getting our finances in order

After achieving the goal in 2008 (two months early!) to pay back my sister the £5k we owed her from a previous property, I feel it is time to set another goal or two to keep our eyes on the (financial) prize.

Goal one - £5k emergency fund
With the current economic climate I think it would be most prudent for us to have an emergency fund. This could only be touched if one of us lost our jobs or we had a major disaster e.g. needing a new roof . Although Mr M and I both have pretty stable public sector jobs I don't think we can be too careful and it would make me much more confident about the second financial goal.

Steps to achieving goal one:
  • Set up automatic monthly DD for £200 to ISA
  • Any underspend for the month e.g. mobile phone bill, council tax etc, send straight to ISA
  • Research new ISA for April for new allowance and move account over
  • If the £5k is achieved before December 2009 then begin saving to pay off car loan.
Goal two - reduce mortgage term to 15 years or shorter
We need to remortgage in February and it is an ideal time for us to assess how much we can actually afford to pay on our mortgage each month. Our circumstances have changed quite a lot since the original mortgage so we should be able to comfortably afford to pay more than we currently do. Reducing our current mortgage to 15 years should see an increased monthly payment which we can afford but taking 8 years off our term. My long term aim is to pay the mortgage off before I am 40. 11 Years to go!

Steps to achieving goal two:
  • Look in depth at current monthly outgoings and work out the maximum we can afford each month. (This amount should stretch us a little but still allow for a few luxuries/emergencies)
  • Book appointment with financial advisor to look at remortgage options.
  • Look at mortgage calculators online to get an idea of monthly payments and terms.
Both goals take us closer to financial freedom and seem quite achievable. I'll be reassessing every couple of months to make sure we are on track.

Mrs M

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